Gratuity Formula - Basic Pay

I came to known there are two acts regarding Gratuity 1971 and 1972; which act can I follow for my employees?
one of employees who completed 5.2 years and submitted resignation, how can I pay gratuity?

Some one says that Last month drawn gross salary is equivalent to gratuity? is it correct? (or) any other formula?

the Gratuity Act for India is 1972 only and the last month drawn salary is not equal to the gratuity amount if the Employee is having more than 5 years of experience in the same organization continuously then he is eligible to get the gratuity amount and gratuity formula is

Calculation of Gratuity
Gratuity is calculated at 15 days wages last drawn by the employee for each completed
year of service. The monthly wage is divided by 26 and multiplied by 15. In computing a
completed year of service the period in excess of six months shall be taken as a full year.
Gratuity = Monthly salary x 15 days x No. of years of service
26
Maximum amount of Gratuity payable
The maximum amount of gratuity payable under the Act is Rs. 3,50,000.00.
Forfeiture of Gratuity

Please find the below mentioned Gratuity formula, employee has completed 5year 7month of service the period so will be taken 6year.

Gratuity = Basic pay*15/26*Year

Thanks & Regards,
Umamaheswaran D
Executive-HR

Quote:

Originally Posted by Bulla Kranthi Kumar

Dear All,

I came to known there are two acts regarding Gratuity 1971 and 1972; which act can I follow for my employees?
one of employees who completed 5.2 years and submitted resignation, how can I pay gratuity?

Some one says that Last month drawn gross salary is equivalent to gratuity? is it correct? (or) any other formula?

Gratuity Act-1972 is followed.As per this act ,the eligibility is minimum service of 5 continuous years. Calculation of Gratuity includes
Last drawn basic+DA+Special Allowance, if any(in special allowance only the portion of which is heading to PF) is considered. The total of these components is multiplied by 15 and devided by 26. The sum arrived at is multiplied by the total number of years of continuous service.The remainder of the service is in excess of 6 months then it is considered to be a full year for calculation of Gratuity.
regards
madhwa

Hi priya,
your formula is right.
but, eligibility for gratuity is continuous service is 5 years. means 4 years 240 days. one year completed means, the employee should work in that organisation 240 days.

As u said in ur posting that 3 components are considered for gratuity calculation viz. Basic+D.A.+Special allowance. Can u give me any documentary evidence(notification or court judgement) of special allowance to be considered for grauity. During my final settlement with my previous employer s.a was not considered for gratuity. This will help me claim my demand with my previous employer.

reds
yogi
09377708949
.

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